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Economy Outlook - April 2008
Posted on April 11th, 2008 No commentsI get the weekend paper and watch the news just about every day. There hasn’t been much but bad news about the economy lately. It’s pretty obvious we are in another recession, but how long will the recession of 2008 last and how bad will it get?
There has been four airlines that have either filed for bankruptcy or bankruptcy protection in the past 2 weeks. 3/31 - Aloha Airlines, 4/2 - ATA Airlines, 4/7 Skybus Airlines, 4/11 Frontier Airlines. Champion Airlines has announced that it will be ceasing operations on 5/31. From the articles I have read - these companies could not overcome to the rise in gas prices.
In the local newspaper it shows the national unemployment rate has shot up to 5.1% - 80,000 jobs were cut in March alone and just barely past the first quarter of the year, we are nearing a quarter-million jobs lost so far this year. Many different businesses were hit, such as construction and real estate firms and mortgage brokers (due directly to the housing market crisis), legal services, airlines, temporary agencies and more.
Another article I found interesting, polled 803 phone-based interviews between March 29th and April 1st. Five economic issues were asked to the people polled, two of which were of most concern - Cost of Gas and Cost of Health Insurance. The other three economic issues - Amount of Taxes You Pay, Housing Slowdown and Ability To Find Or Keep A Good Job - were also clearly issues.
You may be interested to read my article from earlier in the week [Gas Up $6 A Tank In 1 Week?] ‘The Walmart Effect’ may also be one negative for our economic issue, as touched on in my previous article. This effect relates to the airlines because the airlines tried to compete by having the lowest air fares. It may not be well accepted by all people, but I believe it is good to buy the next step up, do it right the first time…If you can buy an item for $5, buy the $8 item. It’s not much more, but the quality is usually better and will last longer than the $5 item - so not only will you get more life out of it but you will have less headache from having to replace the item sooner and spending more in the end. Do it right the first time. It will also help the economy. The highest cost is creating the initial product, using the higher quality materials only increases the production prices slightly - as retail usually works, the price of the item not only goes up due to higher production costs, but it usually has a higher profit margin, thus helping the economy - and indirectly, you.
Amongst the mess of negative news floating around, there tends to always be the strong areas such as government jobs, hospitals and health-care - which increased employment in the past months, as well as educational services, day-care providers, insurance companies and bars and restaurants. I understand why employment at bars has gone up with the economy the way it has been (sad but true), but I would have figured restaurants would have declined - dining out tends to be expensive and I figured people would be not going out as much at a time like this.
Education seems to be a platform that can help you have job security, I see that more and more everyday. For example, if the department at the company you work for is transitioning out, if you have a good work record, education AND show you are willing to learn, most employers will try to find another position within the company if it is available. Learning is not only a good way to help cement opportunities now but also for the future. I think in the coming months colleges and universities will be seeing an increase, even more than the trend has been in past years, of enrollment, due to people educating themselves to move into a new work field or just giving themselves an advantage in the work place.
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Gas Up $6 A Tank In 1 Week?
Posted on April 8th, 2008 No commentsI know the economy hasn’t been too great, the jobs have been going down, the housing situation isn’t that great (although for some - the rich - now is perfect), gas prices have been going up…I tend to just fill up my car every week and just move on with it. But today I looked at the price to fill my tank and it was up to $46, from $40 just ONE week before. That is 15% in ONE week. Now for anybody that understands the significance of that, that is a HUGE number. As an example, most people will get 3-4% raises each year, the rate of inflation (this year I got a whopping .9%…yeah that’s right, not even 1% - it was blamed on ‘corporate’…yeah, right). That’s 3-4% in 365 days, this was 15% in 7 days. My measly ‘raise’ of $4 a week has already been engulfed, and more, by the raise in gas this week
This situation goes back to the all-famous saying, ‘The rich get richer and the poor get poorer.’ This is so true. Say you have some money to invest into these oil stocks or any other company that is doing well, you can make a few pennies or a light chunk of change from the amount you put in. But the people that have lots of money already, have an even easier time getting even MORE money.
Take a look at the poor, they already have trouble affording rent and buying a car or riding the bus. With a raise in gas prices, everything else goes up too, food prices, going out to the bar (beverage prices), in reality - anything that needs to be shipped, goes up. These people had a hard enough time to begin with and now with the prices going up they have a harder time. I saw on TV this morning, that they were going to raise the tax fairs. Last year when the gas was $2.50 I guess, I’m not quite sure, I try not to look at the prices - it cost my mom $40 to travel 12 miles from my place to the airport when I had to leave for work that morning. Now that same trip with the rise in gas prices and fairs would easily be $60-70 dollars. I don’t know about you but I sure as heck don’t want to spend almost a whole days worth of salary (after taxes) just to go a few miles to the airport. Some people give up and don’t take on the challenge when they are working 50-60 hours a week and either not being able to pay their bills or just barely paying them, so then they go on to some government system to help them pay for things.
This affect, in turn, screws the huge middle-class as well. The taxes will go up to pay for the poor that can’t afford their rent or food. So the middle class is out more money and then that means there are less people going out to eat or spending money on luxury items, so that again screws the poor and some middle class.
All of this also affects the economy because there will be less research on new technology items or improvements to things already in existence, who can afford to buy them? Not many people, so why invest in that. And all of this time, the rich have hardly become affected. They can take their excess money out of one stock and move it to another that is doing well at the time, or - in the housing situation we are in now - buy property to renovate and resell when the market goes back up.
The economy is really having a hard time right now. Some people blame it on the banks, some people blame it on gas. I think it’s both. People would be able to handle one OR the other, as with most situations, but BOTH is a double whammy, too much. The government, from what I’ve read, has done it’s deal to ‘help,’ by lowering interest rates. And I put ‘help’ in quotes because, from my understanding, when the feds lower the interest rate on mortgages, that makes the value of a dollar decrease, which - in the long run - screws us all, unless you invest in stocks over seas or buy another currency now before it’s too late and when the dollar gets low enough, buy the US dollar back - but with any of those ideas, you need money.
The rich get richer and the poor get poorer.